Tag: office sector

Addmeet: Investment in RE in Madrid Exceeded that in Barcelona by 2.5x in 2019

7 January 2020 – El Confidencial

According to the real estate portal, Addmeet, real estate investment in Spain amounted to €35.0 billion in 2019, of which 70% was concentrated in Madrid and Barcelona (€18.0 billion and €6.8 billion, respectively). The data compiled reflects all real estate operations amounting to more than €3 million in all sectors of the professional real estate market.

In the Community of Madrid, investment broke all records (€18 billion), exceeding the figures recorded in 2018 (€15 billion) and in 2008 (€10 billion). There, the office sector was the main driver, accounting for 61% of the total figure (€11 billion). The star transaction was the sale of Santander’s Ciudad Financiera, which the financial entity repurchased from Marme Inversiones for €3.2 billion 11 years after selling it to that same firm.

Other office-related deals included the sale of the La Finca business park to the Socimi owned by the Cereceda family for €423 million; and the purchase by Allianz Real Estate of Castellana 200 (comprising 20,000 m2 in office space and 6,500 m2 in retail area) for €250 million.

The next main drivers were the residential sector, which accounted for 11% of investment (€2 billion), boosted by the build to rent segment, and the retail sector, which accounted for 11.5% of the total investment.

Meanwhile, record figures were also recorded in the province of Barcelona (€6.8 billion) despite the “procés”. In fact,  the investment volume almost doubled that recorded in 2008 and far exceeded the total recorded two years ago (€5.6 billion).

Like in Madrid, the office sector in Barcelona accounted for most of the real estate investment (46% or €3.1 billion). The retail sector represented 11.5% (€0.8 billion), whilst the hotel segment attracted almost €1 billion (14%) and the residential segment just €0.5 billion.

Major deals in the Catalan capital in 2019 included the sale by Telefónica of Diagonal 00 to the Philippine magnate Andrew L. Tan for €150 million, amongst others.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Commercial Real Estate Investment Takes Off in 2019

9 July 2019 – Richard D. K. Turner

Commercial real estate investment in the office sector in the first six months of 2019 has already exceeded last year’s total by 13%. Sales totalled €2.595 billion in the first semester, compared to €2.3 billion in all in 2018, according to a study by BNP Paribas. In turn, the sector accounted for 52% of total real estate investment during that same period this year. In particular, sales in the two largest cities in Spain, Madrid and Barcelona, have boosted the market.

Investments in the residential market reached €470 million during the first semester of this year, accounting for 17% of the total. The hotel sector brought in another 12% of investments, while the logistics sector accounted for 18% and the retail sector nearly 14%.

Original Story: Economía Digital

Knight Frank: Investment in Offices Amounted to €1.3bn in Q1 2019

7 May 2019 – Eje Prime

According to data compiled by Knight Frank, investment in the office sector amounted to €1.3 billion during the first quarter of 2019.

By type of investor, in Madrid, 45% of buyers were funds, 25% were institutions, 18% were real estate companies, 9% were corporates and 3% were Socimis. Meanwhile, in Barcelona, 64% of purchasers were investment funds, 19% were corporates, 13% were private investors and 4% were real estate companies.

Yields in the prime areas remained stable at around 3.75% in Madrid and 4% in Barcelona, which are in line with previous years and similar to those observed in other major European cities.

The average prime rent in Madrid also remained stable at around €30.50/m2/month, with prices rising to €38/m2/month in some of the most sought-after spaces in the CBD. In total, 124,000 m2 of office space was leased in the capital during Q1 2019, up by 4% YoY.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

Árima to Increase its Capital by €50M to Repay Debt & Purchase Assets

2 April 2019 – Expansión

The Socimi Árima, led by Luis Alfonso López de Herrera-Oria (pictured below), is going to carry out a capital increase of up to €50 million (expandable upon demand), which will be used to early repay a €30 million loan signed with CaixaBank, as well as to purchase new assets.

The company hopes to incorporate new investors through this operation, which will see its share capital increase by 50%, whereby providing more liquidity for its equity.

The capital increase will comprise the issue and launch into circulation of 5 million new ordinary shares with a nominal value of €10 each, which will be issued without an issue premium. It will be carried out through an accelerated placement aimed at qualifying and institutional investors.

The company’s asset portfolio amounts to €121 million, spans a gross leasable area of 29,000 m2 and includes more than 460 parking spaces in the office sector in Madrid.

Original story: Expansión 

Translation/Summary: Carmel Drake

CBRE: Real Estate Investment in Cataluña Amounted to €2.25bn in 2018

4 March 2019 – Finanzas

Investment in the Catalan real estate sector registered a new record of €2.25 billion in 2018, up by 3.3% compared to 2017, boosted by the office sector, according to data from CBRE.

In fact, offices accounted for 42% (€947 million) of the region’s total investment volume in 2018, up by 25% YoY, as 388,000 m2 of office space was leased. It was followed by the hotel sector, where €422 million was invested, despite a YoY reduction of 39%.

The logistics, retail and residential sectors accounted for the rest of the investment figure, amounting to €289 million, €252 million and €113 million, respectively.

59% of Cataluña’s real estate investment came from overseas, in line with previous years, primarily from the USA (40%), UK (17%), the Middle East-Asia Pacific (16%) and France (14%).

Star operations included Blackstone’s purchase of Edificio Planeta for more than €200 million; Tritax Big Box’s acquisition of the VGP Park Mango for €150 million; and the purchase of the NH Collection Gran Hotel Calderón for €96.9 million.

Original story: Finanzas

Summary/Translation: Carmel Drake

Coworkings: the New King of the Real Estate Sector

15 February 2019 – Eje Prime

Millennials, flexibility, start ups…All of the socio-demographic trends are inevitably leading to one common place: coworking offices. Flexible workspaces have become the great promise of the real estate sector but their largest operator, IWG, generates just 15% of its revenues from them and WeWork is multiplying its losses year after year. What risks does the model have? Can it withstand a recession without the guarantee of the traditional five years of mandatory occupancy? And what if Amazon and Facebook, its tenants of today, end up becoming its main competition?

In 2017 alone, the total volume of flexible workspace in the twenty largest markets around the world grew by 30%, equivalent to 1 million m2. Since 2014, the sector has doubled, and in cities such as London, they account for 20% of the office space leased, according to a report from JLL. In Barcelona, that figure already amounts to 12%.

The consultancy firm forecasts that the European stock will grow by between 25% and 30% per annum on average over the next five years and will account for 30% of some corporate real estate portfolios by 2030. But those predictions hide the major challenges that are threatening the great promise of the sector.

One of the main challenges facing the model is that the operator is tied to a given property for at least five years, like in the case of a traditional office, but its tenants have contracts that last for months or even hours. When the next crisis hits, what guarantees does the owner have that the operator will be able to continue paying the rent?

“On paper, that does seem like a risk, but the reality is that the coworking phenomenon was launched during the crisis”, explain sources at Savills Aguirre Newman. All sectors suffer when there is a recession, but traditional offices are hit harder because whoever cannot bear those costs can afford a coworking space”, argue the sources at the consultancy firm.

Another of the risk factors is that coworking offices have capitalised on the lack of available office space in the centre of cities and also, on the shortage of appropriate spaces for the new ways of working within traditional companies (…).

“The players driving the sector are multi-nationals that are looking for appropriate spaces for their innovation teams or for project-based work”, says Manel de Bes, Director of the Office department at Forcadell.

But, what will happen when the offices of these large companies have adapted to the new scenario? “At the moment, most companies are in the experimental phase; if they consider that the trials do not meet their needs, they will be able to return to more conventional models”, explains JLL’s report (…).

From rock star to conservative player

Within the coworking phenomenon, the rock star is WeWork. The New York-based company, which became the largest lessee of offices in its home city last year, is worth USD 20 billion, but it recorded losses of USD 723 million in the first half of last year.

“Its model is based on taking over the best buildings, in the most prime areas and then competing with other operators on price: it is not sustainable”, argues a competitor in the sector. “Sooner or later, they will have to raise their prices”, he assures.

IWG’s model is more conservative. That firm has an umbrella of five brands and thirty years of history. “We have gone through three or four cycles and we cover our backs: first, by diversifying in terms of the type of tenant to minimise risk. We also ask the owners to invest and we do not select the best buildings or at any price”, said Philippe Jiménez, head of the group in the Spanish market (…).

De Bes from Forcadell forecasts that “Over the medium term, just four or five operators will remain: those that lease 200 m2 or 400 m2 in secondary areas will exit the market”. In fact, the market is already becoming more concentrated: since 2015, the five most important operators have accounted for 50% of all of the new flexible workspace in Europe (…).

Original story: Eje Prime (by Iria P. Gestal)

Translation: Carmel Drake

KF: Inv’t in Offices Amounted to €1.3bn & €0.8bn in Madrid & Barcelona, Respectively, in 2017

13 June 2018 – ABC

The performance of the office sector in Madrid at the end of 2017 bodes well for a “historical” 2018. That is according to all of the investment indicators managed by the real estate experts. Some very positive data for the region, which consolidates the Spanish capital’s position as the most attractive place for companies to locate their headquarters. In fact, it continues to be the greatest magnet for securing capital in the office market with a business volume of €1,324 million – 61% of the aggregated total – compared with €835 million in the Catalan capital. In terms of rented office space, 570,000 m2 was leased in Madrid, compared with 300,000 m2 in Barcelona.

Those are the findings of a recent report about the sector compiled by the consultancy firm Knight Frank, which forecasts greater activity in the sector in Madrid this year due to the rotation of assets by the Socimis and funds to fulfil their business plans. In Madrid, more than 40% of the total investment in 2017 involved funds, which, together with the Socimis outperformed other real estate players during the second half of last year.

The notable differences between the two regional capitals have increased as a result of the effects of the political instability caused by the independence drive and the decrease in tourism that has hit Cataluña. The experts consulted highlight that the rate of company creation has decreased in Cataluña since last summer, whilst in the Community of Madrid, the numbers have increased, with more than 185,000 companies registered with the Social Security at the beginning of 2018.

“The Spanish capital continues to be the key location due to its wide range of opportunities. Net absorption has been increasing for several years and rental prices are still very competitive in comparison with the main European centres”, explains Raúl Vicente, Director of Offices at Knight Frank. Nevertheless, the experts indicate the path that the city should take to become a “super city”. “In terms of the major challenges that it will have to overcome, they include mobility, adaptation to the technological revolution that we are living applied to the service of the city, efficiency, access to housing and an office supply that is commensurate with international demand, amongst others”, highlights the report.

The average price of offices in Madrid’s CBD has been rising in recent years. Prices in the capital now exceed €8,000/m2 on average, whilst in Barcelona, they amount to €6,900/m2. The highest price paid last year was for the former Barclays headquarters in Plaza de Colón, which was purchased from Barclays by CBRE Global Investors for €14,000/m2.

Other notable operations stand out including the purchase of Torre Serrano by Infinorsa and the sale of the Isla Chamartín Business Park to Tristan Capital and Zaphir Asset Management for €103 million. Also, the acquisition of the Palacio de Miraflores on the Carrera de San Jerónimo for €60 million by Remer Investment and of the Los Cubos building by Henderson Park and Therus Invest for €52 million (…).

Original story: ABC (by Adrián Delgado)

Translation: Carmel Drake

PwC Forecasts Record RE Inv’t in Spain This Year

17 May 2018 – Expansión

The real estate market in Spain is striding towards a new investment record. That is according to the partner responsible for this area at the consultancy firm PwC, Rafael Bou, speaking yesterday at the presentation of a report about trends in the real estate market in Europe – he highlighted that the best international scenario favours the arrival of new projects.

Bou affirmed that there is “widespread optimism” amongst the main players in the sector. “Even 2017, with Brexit and Trump, was a year of record investment, and so 2018 ought to be even better, given that we do not have any of that”, he said. In this sense, he also indicated that there is greater political stability in Europe following the elections in France and Germany,

Another factor that will favour the achievement of this investment record is that the European Central Bank (ECB) is going to maintain interest rates low. Bou confirmed that the uncertainty hanging over the sector is not knowing when the current expansive cycle will end; he put a date on the horizon. “Next year, the uncertainty in this regard may increase with the appointment of a new Chairman of the ECB”.

Madrid, the fifth most attractive city

PwC’s survey, compiled in collaboration with the Urban Land Institute, places Madrid as the fifth-ranked European city for conducting real estate business. If we look at the small print, the Spanish capital is ranked in sixth place in terms of the development of projects and in fifth place for the capture of investment.

The research confirms that significant growth is expected in the capital’s office rentals. “Compared to other European capitals to the north, the growth in rental prices has been restricted by the setback that the Spanish economy suffered following the global financial crisis”, he said. PwC highlights the evolution of the retail and hotel sectors, and the repositioning of offices. Madrid has risen four places in the ranking with respect to last year.

Barcelona, which has risen by five places, is now ranked in eleventh place overall. The Catalan city was ranked in thirteenth place in terms of investment and in ninth place for the development of real estate projects.

The report indicates that Barcelona is one of the cities that could most benefit as a result of Brexit, although it warns of the dangers of secessionism. The analysis highlights that the retail, office and residential sectors are currently at a critical point. So too is logistics. “Boosted by demand from e-commerce companies, investors and property developers are buying logistics warehouses and developing new spaces in Barcelona in a speculative way, for the first time since the global economic crisis”, according to the report. “Some people are now talking about a price bubble in the logistics sector in light of the boom that it is experiencing”, added Bou.

The 800 surveys that have been used to compile the study were conducted prior to 1 October 2017, and so they do not reflect the impact on the real estate sector of the political crisis resulting from the Cataluña-independence process. “Having overcome the initial shock, investment has been recovering gradually”, explained Bou. Most overseas investors have returned. “Some people have decided not to invest, but others saw an opportunity in terms of prices and competition and came back quickly”, he said.

Would Barcelona and Madrid have occupied similar positions in the ranking if the surveys had been carried out after 1-O (1 October 2017)? Bou highlighted that Madrid is always ranked higher than the Catalan capital because it is a larger city.

Original story: Expansión (by Gabriel Trindade)

Translation: Carmel Drake

Axiare Sells Planetocio to AEW for €20M

9 March 2018 – Eje Prime

Axiare has sold off Planetocio. The Socimi, which has been controlled by Colonial since February, has divested the Madrilenian shopping centre to a fund controlled by the manager AEW, which has paid €20 million for the asset.

Located in Collado Villalba, Planetocio is one of the few retail assets that Axiare, which specialises in the office sector, still holds in its portfolio. The operation is going to be closed this week and will see the buyer strengthen its presence in the Spanish real estate, after it acquired the Mercado de Fuencarral for €50 million last August.

Planetocio was constructed in 2001 and has been owned by Axiare since 2014, when it paid €99.5 million to the Dutch fund Wereldhave for a portfolio that, in addition to the shopping centre, contained several office buildings and industrial warehouses, according to Expansión.

In total, the Madrilenian shopping centre has a gross leasable area of 19,222 m2 and 797 parking spaces. Following this sale, the number of retail assets that Axiare holds in its portfolio will be reduced to La Mercedes Open Park (Madrid), Les Gavarres (Tarragona) and ViaPark (Almería).

Axiare’s divestment of this retail asset comes a few weeks after Pere Viñolas, CEO of Colonial, confirmed that the “logical” thing would be for the properties that his firm has inherited following its takeover of the Socimi to be sold gradually, although the group has the “peace of mind necessary to do so when it is most convenient”.

Original story: Eje Prime

Translation: Carmel Drake

Aguirre Newman: Inv’t in Offices Exceeded €1.7bn in YTD Sept

1 December 2017 – Eje Prime

The office sector in Spain is stable. During the first nine months of the year, the sector accounted for investment amounting to €1.7 billion, in line with the investment level recorded during the same period in 2016, according to the Office Market Report compiled by the real estate consultancy firm Aguirre Newman.

“The main indicators of the office market (the availability rate, the uptake rate, rental prices and the evolution of stock) have continued their positive behaviour previously observed in recent years”, explain sources at the consultancy firm.

“The high level of economic activity in Spain, combined with the strong economic performance of the main countries in our environment, are having a clear impact on our two main office markets”, they say.

Focusing on Madrid, the gross leasing of office space during the third quarter of the year amounted to 93,173 m2, which represents an increase of 2% with respect to the same period in 2016, although, according to Aguirre Newman’s report, 16 fewer operations were closed in 2017 (down to 96).

One of the most active areas in the capital was the Other Business Districts segment (RDN), which accounted for 31% of the total area leased. Nevertheless, the report highlights that the leasing of space in the Central Business District (CBD), with 27% of the total and the OUT area, with 23% of the total, showed significant increases, more than doubling the figure recorded during the same period in 2016 in absolute terms.

Regarding rents, the maximum recorded during that period was €36/m2/month, whilst the average rent in the CBD area was €28.96/m2/month. In the Decentralised area, the average rent amounted to €12.71/m2/month.

In Barcelona, during the third quarter of 2017, 57,000 m2 of office space was leased, which represented a decrease of 32% with respect to the same period in 2016. Nevertheless, the cumulative figure for the year increased by 8% with respect to the first three quarters of 2016, to reach 265,000 m2.

During the period, 103 operations were closed, with an average surface area of 562 m2, in line with the situation observed in previous periods. The most significant operation by size was the deal closed by WeWork, which leased more than 6,500 m2 of office space in the 22@ district.

“In terms of rents, the upwards trend is continuing both in terms of maximum levels, as well as averages”, explain sources at the consultancy firm. The maximum rent recorded during the period was €23/m2/month, whilst the average rent in the CBD was €18.25/m2/month. In the Decentralised area, the average rent reached €14.01/m2/month.

Original story: Eje Prime

Translation: Carmel